Skip to main content

The Ability to Fade the Obvious

I am a losing win bettor at horse racing, just like everyone. I am tearing up almost 8 in 10 tickets and throwing them on the ground. Virtual scoopers love me. Only on two of ten bets I can smile and say, "I won".

It doesn't mean I lose at betting in the win pools at the end of the year, but when you lose that many bets it can feel like it.

In behavioral economics, "Prospect Theory" explains the fact that we as human beings value wins and losses differently. We derive more pain from losing, than joy from winning, as illustrated in this graph:

You can see this in gambling by simply having a chat at the simo-center or popping on twitter or a chat board. If a horse is hyped, you are told you have to be crazy to bet against them. If a football team is a favorite and scores on their first series you have to be nuts to fade it. Not only will you probably look stupid, you will lose your bet. All those people who are telling you you're stupid add to your grief.

In reality, those are the best times to do exactly the opposite of what the masses are telling you to, because the odds will be in your favor. The odds matter, not being right or wrong.

The thing that strikes me about the Prospect Theory model when using it for horse racing is that if we think about it, the above graph is the thing that's wrong. Whenever I speak with a player who remembers a big score they almost always faded a chalk to get it. It's where you generally make those huge, memorable wins: Throw out the Green Monkey, fade that Derby hype horse, bet against a bridge-jumper.

We incur pain because we may lose those bets, but over time we remember them adding to our utility. That graph should actually be a lot closer to symmetrical.

As horse racing bettors we need to always fight those demons because they are always nattering at you. But to beat a 20% takeout we have to, or we end up losing our shirt. And we have to always remember that big picture: In the end losing your shirt feels a whole lot worse than being wrong.


Alpha Link said…
I didn't know that it had a name. Years ago, a maniacal gambler in a moment of clarity and insight observed "losing feels worse than winning feels good..."
I concur!

Popular posts from this blog

Sword Dancer Shenanigans Proves the Public's Point

Ask any random person who has not watched a horse race, or maybe have seen one or three : "Is horse racing fixed?"

They'll probably say, sure it is; common knowledge.

At that point, racing folks get excited to defend their sport. 99% of the races are clean, there is too much money involved to fix races, etc etc. 

Then we have yesterday's Sword Dancer, where not one of us can blame anyone for thinking like they do about the sport.

It's probably bad enough that a "rabbit" was entered for an old-time form of race fixing, but that the horse was ridden like a quarterhorse made the optics look terrible. That another horse - Roman Approval - had to be physically restrained due to the cowboy style race riding of the horse sent to destroy him, is probably just as bad optically.

But that was just the beginning. The real story had just begun.

At the head of the lane, this rank, spent, heart-ripped out rabbit, needed to do even more work for the 1-9 shot. He had t…

If #harnessracing is Afraid of the Answer......

There's a saying, apparently, from the legal community - never ask a question if you don't know the answer.

Today at the USTA meeting Jason Settlemoir put forth a motion that the USTA ask its membership the feelings on a question regarding slots and marketing. In a nutshell, it asked if a percentage of slot money should go into a slush fund to be spent on marketing and ancillary items to promote and grow the sport.

When the 54 director votes were tallied, the score was 47 to 7..... against.

Yes, the leadership of an organization voted down, in a landslide, asking the grassroots membership a question. 

Sure this seems super-silly, but why they did it, I think, is an easy one. They knew that if they asked the question the answer would be a resounding "yes". Then all hell would break loose. They'd have to try and get that done.

If harness racing is afraid of the answers to questions, they don't ask them. That seems to be the mantra of the sport. And it's p…

PTP's Bathing Index ® Derby Handicapping Angles - This is Much Better than Dosage

Good day racing fans!

It's one week until the Derby, where drunk people, rich people, sororities at almost every University, and others get together to watch, wager, take molly, drink juleps, wear hats, have parking issues, and partake in the annual Kentucky horse racing tradition.

I have scanned the big websites, read almost all social media and was very surprised that there are not a lot of people giving their thoughts on this year's Run for the Roses. It's like no one has an opinion! So in my never ending search for traffic, I decided to pop up a handicapping post. I think this post will help both new fans and old salty handicappers land on a winner.

As most know, physicality is important for handicapping (Leadbetter, et al). A lesser known angle is watching how a horse reacts while getting soapy water thrown on him. As long time handicapper Jessica notes, it can be a key to unlocking Derby betting fortune.


Let's begin with our control group, Kentucky Derby …